The UK accounting regulator is investigating a little-known firm’s audits of four companies in GFG Alliance, the business empire built by metals tycoon Sanjeev Gupta.

The Financial Reporting Council said on Wednesday it had begun probes in relation to audits by King & King, a two-office firm that has audited scores of companies in GFG, Gupta’s loose collection of businesses.

The investigations cover the financial statements of GFG’s key UK businesses, including that of Liberty Speciality Steels for the year to March 2019 and Alvance British Aluminium, formerly Liberty Aluminium Lochaber, for the same year.

The FRC is also examining the statements of Liberty Steel Newport, also for the year to March 2019, as well as those of Liberty Performance Steels for the year to March 2020.

The decision to investigate was made at a meeting in February, the FRC added, but it did not give any further details. A Financial Times analysis last year revealed that King & King audited the most recent accounts of more than 60 GFG companies in the UK, with combined revenues of almost £2.5bn.

The FRC did not say which aspects of King & King’s work it was investigating. The firm has faced questions over its independence. 

At a parliamentary hearing last year, Milan Patel, partner at King & King, told MPs that the firm complied with the accounting industry standards that caps fee income from a single audit client at 15 per cent.

However, he did not say whether GFG companies in aggregate accounted for more than 15 per cent of audit fees received by King & King.

If the FRC finds wrongdoing by King & King or its partners who led the audits, it has the power to impose sanctions including fines and a ban on signing off company accounts

The FRC is already probing another auditor, HW Fisher, in relation to its audit of another Gupta business, Liberty Commodities, for the year to March 2020.

Gupta has been battling to refinance his sprawling conglomerate since the collapse in March last year of Greensill Capital, his main lender.

The news of the FRC’s probe comes days after investigators from the UK Serious Fraud Office visited sites connected with GFG to demand financial documents as part of its probe into suspected fraud, fraudulent trading and money laundering at Gupta’s empire, which the company has denied.

In a statement, GFG said that “No GFG entities or individuals are the subjects of the FRC investigation”, adding that “we recognise the importance of strong audit practices and have been evolving our corporate structure and governance.”

 King & King has been contacted for comment.

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